Have you noticed lately that gas prices are moving from costly to just plain aggravating?! Often during the summer travel months a gas price increase is common, as oil companies are looking to take advantage on an increase in fuel needs; however, it’s December not July! So what gives? Why are gas prices rising?

The US Market is Improving

Oil, among many other commodities, rises and falls in value as the economy moves. The graph below shows the Dow Jones Industrial from January 1, 2010 until now, December 29, 2010.

Notice how similar the rises and falls are to the retail gas price graph shown at the beginning of the article. See some trends? We do too… and it makes some sense, right? When an economy is expanding, energy is a real cost of that expansion. People are driving to and from work; goods are being transported from one factory to another; planes, buses, trains, and other vehicles are needed more, etc…

The World Markets are Expanding

Why are gas prices rising? Certainly it’s not just because the United States is seeing economic growth. China, India, Brazil, and other developing countries are seeing true economic expansion. And as made clear above, growth of this kind requires energy! And the United States is certainly not the only country in need of oil!

Below is a graph of IBOVESPA, the Brazilian equivalent of the Dow Jones Industrial, over the past 5 years:

As you can see, over the past 5 years Brazil has seen true expansion in its economy. Again, as a result, energy is needed! Why does a Brazilian oil need impact the United States? Remember, much of the world supply comes from the same place, the OPEC countries. Learn more about these countries and their impact on fuel prices in a previous article I wrote this month entitled “Why Are Gas Prices Going Up Again?”

—————————-

I understand this is not totally comprehensive. Yes, there are other factors in play here–political, potentially, that we are not considering. However, suffice it to say, domestic and world economic improvement causes an increased need for fuel. And as demand increases, prices rise–economics 101.

I am, however, not naive enough to think that these are the only factors.

29 Responses to “Why are Gas Prices Rising?”

What proof do you have that our economy is growing commensurate with the rise in the Dow? This is a classic asset bubble. Our economy is not expanding appreciably – to the extent there’s more spending, it’s because the credit policies – and group psychology – that got us into this mess are being doubled down on now.

Worldwide demand is up to some extent, but two things: first, a lot of this is anticipated demand – if everybody wishes hard enough together, we can make the worldwide debt crisis go away and go back to unbridled growth. Second, remember that global oil transactions are conducted in dollars. The rise in oil prices – and the Dow, for that matter – is far more a reflection of both wishful thinking and a debased dollar than it is healthy economic growth in the U.S.

After all, China’s been growing at 10 percent per annum for what, thirty years? That demand is already baked into the speculators’ cake. Besides, China’s got some of its own fiscal fires to put out right now.

In addition, with the moratorium our Adolescent-in-Chief put into place, domestic supply is projected to take a hit to the tune of 220,000 bbls a day.

It is the policy of this administration – and Big Government in general (for Big Government now dwarfs any reigning administration – but, serendipitously for Democrats, it always leans far left) – to cause energy prices to skyrocket here in America, even in the face of overall increased global demand.

The rise in fuel prices is NOT a sign of a healthy economy back on track – not here in the U.S. It is a red flag signaling that, in terms of recession, we’re at the beginning, not the end, of a protracted fall. And remember, Obama himself said coal prices would “necessarily” skyrocket under his proposed policies – do you think his arbitrary moratorium is unrelated?

It is all part of the plan among liberals to have a controlled society that not only limits your and my ability to use energy the way we see fit, but to ratchet the U.S.’s power as a hegemon back to make way for the Utopian Global Community. That’s why Cap and Trade will be put into law by hook or by crook; if they can’t legislate it, they’ll regulate it into existence – all to limit U.S. growth. To cut American prosperity off at the knees.

Well, your prosperity and mine, that is. If one of the consequences of a Marxist economy is that those elite Big Thinkers who are self-appointed to “nudge” us into a higher plane of existence happens to be that they accrue vast wealth in the process (a la Al Gore), well, that’s just way the society crumbles, right?

China must look at us and laugh; they don’t have to entice us into the spider’s web. Chumps that we are, we’re walking right in, blinded by Utopian goggles.

Let me get this right. When the republicans were in control of both congresses and the presidency, oil prices went up and oil companies made record profits. To put such blame on the liberals is absolutely ludicrous. There were no liberal marxist in office then so who or what was the blame then. Just sounds like another Obama hater moment.. Get over it “tea baggers”.

Wow. You can use the word “tea” and “bagger” together in a sentence! That sure refuted my argument. Glad you didn’t trouble yourself to mount anything, you know, substantive.

The evil oil companies make, at most, 5 to 6 cents a gallon on gasoline; the goverment makes anywhere between 18 and 57 cents a gallon through taxes.

I’m sorry, remind me again – whose the profiteer? And don’t forget, the evil oil companies are the ones who build the infrastructure and invest the capital to deliver a product. The government just comes in and, in typically mafioso fashion, takes their cut through force.

Grzmlyk,
Your distorted view of the “evil oil companies” leaves out the republican mandated subsidies that throw billions of OUR TAX DOLLARS toward fossil fuel each year. of which, NONE is being attacked or even mentioned in todays conversations. Read the 2005 energy act, and tell me who the suckers are. Research ethanol SUBSIDIES and the the mandated ethanol added to our fuel, along with the TAX SUBSIDISED manufacture of the ethanol to the tune of 0.25 per gallon! Now don’t tell me about 5 to 6 cents a gallon! I dont care weather you are left or right leaning. The math should be the same for either side.
On another note, until we start looking at things clearly, with OBJECTIVE, LOGICAL reasoning, and quit looking through politically filtered glasses, where one side of an argument simply dismisses someone as a left or right wing whack job, this country has not got a prayer to improve. Politicians on BOTH SIDES are playing the public like a harp.

If you guys realize its the growth of other countries that is driving the gas prices way up and continue to rise until it becomes un affordable to a lot of us. Obama cannot even control what is going on. Watch the movie collapse

The gas prices are rising because the gas companies are GREEDY and no one will do anything about it and they know it. ITS total BS about the time the country starts improving the gas companies will break us again THEY PUT THE COUNTRY IN THE SHAPE ITS IN AND TRYING TO PUT US BACK DOWN AGAIN. The gas compaines are no different than any country that attacks the USA. they are going to bring the USA to its knees again……..

Are problem is that there is free power to be made the tech is here but due to the use of gas and ( oil ) they wont invest in this free power device and only because gas companies are GREEDY ….so that being said .i believe are lord will be saving us soon …..2012 i love you god i pray for the hearts of all …god bless EVERYONE

I dont believe this S#!# has anything to do with why our gas prices are going up! The biggest reason is GREED! why should an OIL company bring in $10.3billion when cost of producing and distributing is 1/3 of that, i blame them for part of our economy being this way!

The oil company CEO’s, etc will get what’s coming to them. I would never wish bad upon anyone but I hope they all rot in hell. Many countries do not like Americans and it’s total bullshit. We always help other countries, we just gotta show them whose better!

The reason gas prices are rising is purely the GREED of the big oil companies and the fact that they know nothing will be done by our government until some senator decides that he is going bring the issue up and demand the big oil company leaders come before his committee to explain. They will appear before them, lie and everything will go on status quo. This is the typical way that our government operates. Most senators are big bags of wind who like to hear themselves talk. They are more impressed with themselves then the issues at hand.

For those of you who blame the oil companys for rising gas prices, you hit the nail right on the head. They know they days of ruling the roost are coming to an end, with more studies being done on alterative fuels and vehicles designed to get 25-35 mpg and using LP gas on vehiches will soon put a stop to the oil companys emptying everyones bank accounts. We the people can drive the price down by driving less. Back in 07 08 gas prices pecked at $4.11 a gallon, 3 1/2 months later the price was $2.59 a gallon. All we have to do is use less gas, and let their storage tanks fill up set there for a while, they will drop the price to get the product moving again. Just stay at home and get your honey do’s done and watch and see how this play’s out.

The big oil companies do not set the prices it is the local companies and the idiot speculators. The barrel of oil for April is at 100 bucks a barrel not the current oil stock levels. Please tell me who is greedy and raising prices as soon as the barrel goes up?????Plus the government can lower their taxes but no that can’t be done. The Big Oil companies get the oil from the ground and pay for all the expenses but being knuckle heads on how oil is produced you do not realize this process. The whole issue on ethanol shows how ignorant people are to ethanol. The production and cost is more expensive than oil and requires a large useage of water. The left is responsible for higher prices due to no drilling in locations where oil is located and the Global warming scam.

What difference does the excuse made for high gas prices matter? Ten years ago when the economy was in far better shape, prices were a third what they are now. It boils down to greed and a lack of a president willing to fight for prices the people can afford. What do you think will haen to the economy when no one can afford to drive? It’ll collapse all over again!

We need to tell the government and the oil companies to kiss are asses. The government is ran by the bilderbergs and they are the ones who control this economy, and set the prices of our gas. Every political man and woman are controled by these people. Obama is just a face of a nothing, he can’t change anything, just like every other president, nothing but a liar and a thief. Fuck all governments, commy bastards

Yes this is all about profit and the fact that we depend on other countries oil and oil too much. We need to use the oil we have in the US. The president has the power to get more of this. However why are we in the 21st century and still using gas powered cars. We need to stop relying on something that greedy people have control over and find something we can control.
For now we need our government to step in and say that the laws of supply and demand do not dictate that the price of oil must continuously change wen the supply is up and the demand is down. Not to mention that as soon as the price goes up the consumer must pay more on gas that was already delivered at a lower price. If you want to be a tea party person block the import of oil and demand the use of our own oil. Or continue to let other countries dill off of our shore and sell it to other countries.

Where are the scientists who study these things? Don’t we have educated minds who truly understand all the facets of this problem somewhere? Maybe they all work for the Oil companies.

It seems to me all the political bs answers in the world do not solve the problem. The left the right, but the hole is right in the middle. Is it not?

Greed and power, history repeats itself. The rich rise thinking they are going up, until the suddenly lose everything, or maybe just their lives, their children and everything else like the French, the Cambodians, the Egyptians, The Romans, The Persians, The Czar of Russia, even the Queen of England, just a puppet sucking money like a parasite from her loving country.

People are the problem, at least some of them. Why won’t the good ones stand together and refuse to tolerate the scum? Where is a leader that will ask us that question, and follow through? Most always take care of their special friends no matter what. Obama should state the crime T. kenedy commited and ask why he was never charged with manslaughter, never served his time and how he was ever allowed to be a senator. He was drunk, driving and a woman died because of him. Obama let me buy his dog. Please wake up people this is not left or right, this is good people against scum bag, greedy, power hungry sobs trying to live large off of us. Enough is enough.

The reason gas prices are high is not the greed of the oil companies. There is competition between them and they all try to sell their gas lower than the next company to sell more gas and make more money. The reason is the government. Back in the 1970s, the environmental greenies made a law. This law made companies produce different mixtures of gas (26 total) starting in the spring summer area. This is why gas prices go up every spring. The companies have to make different mixtures of gas to protect the environment. The greenies want us all to die or live like Indians. Also, several polititians have conducted investigations against a gas price conspiracy and have come up empty every time…

THE WORLD CARTEL CONSORTIUM’ DEMONIC ASPIRATIONS TO MAXIMIZE PROFITS WHEN TO LITTLE PRODUCT IS CHASING EXPANDING MARKETS-IS A DEATH-KNELL TO ANY MEANINGFUL WORLD PRODUCTION EXPANSION.. THEY ARE OVER-SPECULATING, SHIFTING SPOT PRICES LIKE A 3-TRICK-MONTE SHELL GAME FOR SUCKERS, AND THE FRAUD REVELATION IS GONNA MAKE THE U.S. TOXIC DERIVATIVE PONZI LOOK LIKE A CAKE-WALK! WE CAN BLAME SAUDI INTRANSIGENCE TO BOOST PRODUCTION OUTPUTS-BUT WHY SHOULD THEY? THEY CAN GET BETTER PROFIT MARGINS BOUNCING AND RESELLING THAT BARREL OF OIL ON TRANSFER MARKETS-WHICH ADD TO THE PRICE EVERY TIME THEY RESELL IT-OVER AND OVER. WHY SELL THE PRODUCT TO AMERICANS WHO DRINK IT FASTER THENN A FAT BOY SLURPING DOWN A CHOCOLATE MALTED IN A HAMBURGER STAND? IT’S ABOUT GREED-NOT EFFICIENT USE OF RESOURCES-AND NOT CARING ABOUT POLITICAL LIAISONS. OUR CURRENCY IS HELD HOSTAGE-AND OUR ECONOMIC GROWTH POTENTIAL IS GUTTED. CAN YOU ALL UNDERSTAND THE REALITY??!

We have little control over our government representatives, and less control then ever over world markets. oUR ANSWER-CREATE WARS-KILL OFF OUR OWN PEOPLE, AND MAKE UNRELATED ANSWERS TO UNCOMFORTABLE ISSUES WE HAVE NO ANSWES FOR—PERFECT “MAD HATTER” LOGIC. ” JAM YESTERDAY-JAM TOMARROW—BUT N-E-V-E-R JAM TPDAY”! THAT IS WHY YOU HAVE NO JAM ON YOUR BISQUIT AND THE TEA IS THRICE STRAINED AND WEAK! PROMISES WITHOUT SUBSTANCE. THE GREEDY LIKE IT THAT WAY-KEEPS THE POOR SOTS IN LINE AND MOVING ALONG, YOU KNOW!

The price of oil (pomposity) is all about the Wall Street and Washington D.C connection: The campaign contributions (Oil companies & Wall Street Financial Institute’s/Investors), special interests groups(quid pro quo, domestic & foreign), lobbyist (legalized bribery, ex-senators/congressman), speculators (lWall Street legalized collusion, price fixing), and politicians that are for themselves first and their party second. There is no third, fourth, fifth etc.. There is very little difference between the republican and democratic partys. Us true Americans need to realize this and vote the lying, cheating. thieving, traitors out of office. We need a party for the people not a party for the party. We need leaders not greeders.Congress is the controlling factor. They are arrogantly self serving and completely disconnected from what the people need/want . We need a peaceful revolution in this country via voting out both partys and vote in a PARTY FOR THE PEOPLE. We can start by voting Independent. Republicans, Democrates you insult the intelligence of the American People and you believe the people are to serve you instead of you serving the people as you were hired to do. You are not doing your job. “YOUR FIRED” and should be “PROSECUTED”. Oil Prices is not about supply and demand its about corruption in Washington and Wall Street.

Economics 101: Gas is an inelastic demand, meaning, price increases and decreases don’t affect the demand as much as other elastic goods. Also, there has not been an increase in demand for gas…assclown

Rising gas prices are no less than big oil flexing economic muscle against political powers that be, under threat of losing tax credits and other government subsidies which now only serve to create astronomical wealth for those in the oil and gas business while continuing to rape and economically castrate average consumers who NEED fuel to conduct necessary tasks such as going to work (if work is available), getting children to school, and other mundane “real” people activities. Those in the industry are no less than blood sucking tyrants against whom average citizenry feel powerless. Casting the phenomenon off on “rising demand” is a crock! No such demand worldwide or locally exists except in the minds of those who would use the excuse to justify selfish greedy motive!…We ALSO KNOW that FOREIGN CARTELS ARE NOT TO BLAME AS BARREL PRICES HAVE NOT INCREASED… Remember U.S. fuel suppliers, what goes around always comes around…and greedy oil will get its due even as banking and mortgage got theirs! Take the initiative BIG oil…do what you know is right, not for you but for the consumers you supply!

this is in response to the Great Republican Zealot Misrepresenting Lilliputian Yahoo Knave are you-A- a republican computer program ? or – B-oil comp lobbyist or -C – republican spin doctor -D- just stupid